Independently Sponsored

Independently Sponsored: Seneca Partners

November SPOTLIGHT

Mike Skaff

Managing Director

FIRM OVERVIEW

Seneca works closely with family offices and institutional capital partners to invest in profitable businesses based in the U.S. and Canada. They focus on opportunities where Seneca can play an active board role to add value, as well as industries where they have a deep understanding of the dynamics, trends, and potential growth strategies.

Firm Profile
Based in Metro Detroit
20-Year History
100+ Transactions
Team of Eight
Areas of Focus
Manufacturing
Industrial Services
Healthcare Services
IT Services
Direct-to-Consumer
Specialty Finance
Investment Criteria
HQ in US & Canada
Revenue: $5M to $100M+ EBITDA: $3M to $25M+ Equity: $3M to $50M+

Q&A with Mike Skaff

What’s the firm’s origin story?

Seneca Partners was formed in 1999 as a merchant bank, doing both investment banking and investing into privately held companies. In 2003, we formed Seneca Health Partners, a small, committed healthcare fund focused on growth stage investing. Over the years, we continued to grow the investing part of the business and slowly decrease the investment banking portion. Beginning in 2016, we decided to exclusively focus on independent sponsor investing. We have closed 12 independent sponsor transactions since 2017, have 10 current portfolio companies, and are targeting a minimum of four new platforms per year going forward.

What is your investment thesis or value proposition?

Seneca is a generalist investor focusing on six main areas of interest: industrials/manufacturing, business services, tech services, healthcare services, B2C and specialty finance. We will work on transactions with $3M-20M+ of EBITDA. We also realized several years ago that we could partner with and be helpful to other independent sponsors to get their transactions completed. Now, at least half of our deal flow comes from other independent sponsors and seven of our current 10 portfolio companies were originally sourced by another independent sponsor(s).

Any notable differentiators for the firm?

Seneca’s active interest in partnering with other independent sponsors has differentiated us from many other firms. There are several reasons that other independent sponsors have been interested in collaborating with us:

    • Seneca has a deep team with eight professionals today and we will add a ninth before year end. 80%+ of the independent sponsor universe is composed of one- or two-person teams who can become bandwidth-constrained quickly with existing portfolio companies and in process deals. With its larger team, Seneca can lead or assist the other independent sponsor(s) in model building, CIM and management presentation development, conducting due diligence, and other important execution items.  
    • We have invested a significant amount of time, resources and energy to develop, track and rank our capital partner network, which includes over 300+ family offices, 800+ PE funds and asset managers, and 150+ credit, SBIC, and mezzanine funds, all of which have indicated an interest in partnering with independent sponsors. On each potential transaction, we run the deal’s investment criteria against our CRM to curate a targeted prospective partner list that is more likely to identify the ideal capital partner(s). We successfully partnered with Trivest’s TGIF I fund on a recently-exited portfolio company, Big Truck Rental. (Editor’s note: check out Beyond Control with Scott Dols.)
    • We are enthusiastic about creating an agreeable sharing arrangement across all sponsor economics with our independent sponsor partner(s).

what are you looking for, and where are you seeing opportunities?

We are very active in the market now, with three deals currently under LOI and five more that are relatively close. We are seeking add-ons for many of our portfolio companies, including our rail-focused businesses and our marine services business and have two transactions in process. We have also targeted home services as a sector of interest and have reviewed potential platforms in this space.

Finally, can you regale us with an interesting or funny M&A story?

In our investment banking days, we were working on a challenging sell-side process and had made a deal with a mercurial strategic buyer. Because the process was quite delicate and we weren’t sure that this particular buyer was going to ultimately transact, we wanted to be sure that our backup buyers were still available if something went awry. As such, we had one main condition for our buyer: you can’t tell anyone we are planning to proceed with you. After receiving numerous oral and written assurances, we decided to sign the LOI with this buyer. The next morning, the local newspaper had a front page story with a quote from our buyer explaining how happy he was to be selected. In spite of the firestorm, we ultimately closed with the buyer, but remained “gun shy” for the rest of the process.

“Independently Sponsored”

Trivest has a long and successful track record of working and closing deals with independent sponsors. In this series, we interview a leading or up-and-coming independent sponsor about their firm. To mix things up, at the end of each interview, we ask our guest to recount a particularly memorable (and hopefully humorous) deal-making experience. Our goal is to deepen the knowledge and strenghten connections within the independent sponsor community.
Interested in taking part? Have a potential transaction to discuss?
EMAIL TONY HILL

About Trivest

Trivest Partners, with offices in Miami, Charlotte, Chicago, Los Angeles, Philadelphia, and Toronto, is a private investment firm that focuses exclusively on the support and growth of founder-led and family-owned businesses in the U.S. and Canada, in both control and non-control transactions. Since its founding in 1981, Trivest has completed more than 400 investments, totaling approximately $7 billion in value. The firm has roughly $4 billion in assets under management, with a growing team of over 65 professionals. Trivest has been honored on Inc. Magazine’s list of the top founder-friendly private equity firms in four consecutive years — every year since the list’s inception.

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